Many companies remain doubtful about a “remote work revolution,” but the benefits of remote teams are hard to deny. From faster, less costly hiring to more satisfied employees and a more diverse workforce, supporting remote employees is reshaping modern corporate structure in many positive ways. But as with much of remote work, there are tradeoffs, and every organization needs to assess whether the benefits outweigh the risks or potential downsides.
Real estate is not cheap—in tech hubs like the Bay Area, New York, and Seattle, the costs of office space and housing are increasingly a major barrier to entry for smaller companies and startups. According to The Square Foot’s office space calculator, a 200-square foot allocation per employee costs as follows per year:
|City||Cost per employee|
Source: 2019 data from The Square Foot
Global Workplace Analytics cites a number of significant operational savings from remote work:*
IBM slashed real estate costs by $50M.
McKesson saves $2M a year in real estate costs.
Nortel estimates that they save $100K per employee they don’t have to relocate.
Average real estate savings for companies with full-time remote work can be upwards of $10K per employee annually.
Depending on where your company is (if you have an HQ) and what your compensation approach is, you could also potentially save money on salaries—perhaps significantly more than by eliminating office space. If you aren’t paying San Francisco-based rates (especially for technical roles), you stand to save a substantial amount by working with employees distributed in far less expensive regions.
controversyRegional vs. global compensation is controversial. You may wish to reduce costs by offering locally adjusted salaries instead of a single globally fixed option, but there are philosophical, moral, and logistical tradeoffs when considering different compensation strategies. We cover this in detail in Compensation for Remote Employees.
Hiring is one of the biggest pain points for companies, especially startups looking to scale rapidly. The majority of companies we spoke with pointed to hiring as one of the primary reasons they’ve embraced remote work. One of the clearest benefits of remote teams to companies is a global talent pool that is not restricted to highly competitive, expensive urban tech hubs.
importantHiring a single employee can cost between $4K-$7K (and often more for highly technical or specialized roles), and can take upwards of two months.* Hiring remotely opens up a world of candidates, greatly reducing the time and costs companies incur to find talent. Fully distributed companies take 33% less time to hire a new employee (4.5 weeks vs. 7 weeks).*
Hiring is expensive, but hiring people who don’t stick around very long is even more costly. The 2019 State of Remote Work report by Owl Labs and Kate Lister of Global Workplace Analytics have some of the most compelling results about the power of remote work to improve employee satisfaction with their job and increase willingness to stay with their current company. They found that companies that allow some form of remote work have 25% less employee turnover than companies that do not allow remote work, and that remote workers are 13% more likely than on-site workers to say that they will stay in their current job for the next 5 years. The benefits don’t just apply to full-time, remote-only employees, either—even people who work from home occasionally report higher levels of job satisfaction.
Remote work also means that companies won’t lose people if they have to move for any reason. If their spouse gets a job in another city or they need to be closer to family when they have kids, a remote employee can relocate and keep doing their exact same job with almost no impact (although time zones are the potential complicating factor here).
Companies stand to benefit from more diverse pools of candidates by being able to hire anywhere in the world. Employers no longer need to rely on hiring people who can only afford to live in expensive urban areas, which excludes a significant slice of the population, often along socio-economic and racial lines. Supporting remote work allows employers to hire people who want or need to stay close to home. This can include those who have caretaking responsibilities, which can have an impact on diversity and inclusion, because women are still more likely to be caretakers than men. Hiring remotely also lets employers select people whose disabilities impinge on their ability to commute and/or work in an in-office setting.*
Still, we don’t yet have the data that proves increased diversity of teams is in fact happening at remote companies. Remote.com found that more women have CEO, founder, or President roles at remote companies: 28%, compared to 5.2% CEOs in S&P 500 companies and 6.4% in Fortune 500 companies. We don’t know of any data related to the diversity of remote teams, but hope that as remote work proliferates, more information will emerge.
contributeWe’d love to hear of any other studies with data on diversity at remote companies. If you know of any, please let us know!
cautionAccess to a wider range of candidates is definitely one of the pieces of the puzzle to increase diversity at your company, but it’s only a small one. Unless you adopt a broad set of hiring and retention practices aimed at improving your hiring processes and providing an inclusive workplace, you won’t reap the full benefits. We cover this in detail in an excerpt on improving diversity and inclusion in the hiring process from the Guide to Technical Recruiting and Hiring.
The increasing rate of natural disasters around the world have forced many companies and local governments to consider remote work as part of their disaster and emergency plans. U.S. events like Superstorm Sandy, Hurricane Harvey, or the 2018 California wildfires kept thousands of people from going into work, and disrupted business operations for a large number of companies. During a severe East Coast snow storm in 2010, the U.S. Office of Personnel Management originally estimated the shutdown would cost $100M per day in lost productivity. They later revised the number to $71M per day to reflect the fact that their teleworkers (remote workers) were still able to work.* Companies that already support remote work are at an advantage, as they don’t need a separate set of policies, technology, and equipment for when people suddenly have to work somewhere other than the office.
importantRemote work can help in localized, non-life-threatening situations. Of course, in the event of larger incidents that threaten people’s safety, companies will want to ensure that no one is put in danger in the name of business continuity. It also raises the reality that individuals may be impacted locally themselves when the rest of the company is not. While companies may not necessarily have full-blown disaster and emergency response plans and protocols for remote workers, it’s wise to ensure remote employees know what steps to take, including whom to contact at the company, when a disaster or emergency happens.
Early forays into remote work in the 1970s emerged in direct response to growing gridlock and concerns over fossil fuel consumption.* More recent studies have turned up some very convincing data when it comes to remote work reducing daily commutes, which has a positive environmental impact. FlexJobs reports on a host of positive outcomes, including:*
7.8B car miles not driven
530M trips avoided
3M tons of greenhouse gases not emitted
$498M in avoided costs of traffic accidents
$980M in oil savings ($50/barrel)
importantOne unreported consequence of remote work is a possible increase in air travel for some percentage of the remote workforce. Managers and executives in particular are likely to fly more in order to meet with each other and their teams, and many remote companies fly people for semi-regular team offsites and annual (or possibly more frequent) all-company retreats. We don’t know of any studies on what the environmental impact of this side-effect of remote work is, but we are aware of one company (Convert) that works to offset the carbon impact of all their business operations (not just travel).*
Flexible schedules are one of the most prominent benefits universally cited by people who work remotely. Whether it’s more time with family, mid-day exercise, working when you want vs. set 9-to-5 office hours*, flexible schedules typically lead to self-reported improvement in people’s work/life balance—often because of powerful drivers that can include the increasing demands of parenting, the growing number of older relatives that need care, and the desire for a career as well as a family.
importantYou’re still working for another company, so your schedule can only be so flexible. Some people have unrealistic expectations of just how flexible they can really be.
The benefits to remote employees when it comes to saving time and money are almost indisputable. The top ones include:
Commuting. Aside from the environmental benefits, no longer jumping in a car (or on a train or bus) can save remote workers thousands of dollars per year.*
Cost of living. Remote workers aren’t tied to major cities and urban centers, where costs of housing and other related factors continue to increase. They can move to better-priced locales with lower costs of living.
Office attire. Yes, it’s a funny meme that remote workers never change out of their pajamas. But in reality, not having to keep up with traditional office clothing norms can reduce your annual wardrobe and dry-cleaning spending each year.
Not eating out. Remote workers aren’t necessarily more frugal, but it is certainly easier to save money on food and coffee when you have a kitchen in your workplace.
Child care (maybe). This is not a given source of monetary savings; just because you work from home doesn’t mean you can simultaneously care for children, especially the younger they are. But working remotely may mean you’re closer to family or a preferred childcare location, and having a more flexible schedule can help with the kinds of things parents might otherwise not be able to do, like making sure the kids are picked up from lessons or dropped off at friends’ houses.
Over eight in ten remote employees work from home, with most of the rest working from a coworking space or a coffee shop. This location independence was the most important benefit to around 30% of remote workers. It’s easy to understand why—people tend to be more comfortable in their homes; remote workers are less likely to be interrupted by colleagues when they don’t want to be; and 90% feel that they’re more productive.*
Control over your work environment means you can change locations to best suit your work style preferences or the kind of work you’re doing. If you prefer quiet times to focus on work, then a home office is your best option. If you thrive on the buzz of people around you, then communal work spaces or coffee shops may be a better choice. Not being tied to an office means you can choose which suits you best and at which times.
While the time- and cost-savings benefits are largely inherent to remote work, reaping the potential health-related benefits requires dedicated attention (from both the employee and their manager). One remote employee could use their extra time saved from commuting to go to the gym or for daily walks, while another could simply log more time in front of the computer. The same goes for mental health—you have more flexibility and time to take care of whatever helps you feel better, but remote workers commonly suffer from overworking and not being able to disconnect at the end of the day. (See Morale, Mental Health, and Burnout In Remote Teams and Personal Health for more in-depth coverage of this topic.)
People living outside urban technical hubs—especially in less economically developed areas—stand to gain significantly when it comes to how much they can earn.* Depending on a company’s compensation philosophy, a software engineer in Bogotá, Colombia could stand to make the same as someone in San Francisco, with a corresponding vast difference in how far that salary can go because of the lower costs of living. Even when companies adjust for local geographies, remote roles often still pay far more than anything someone could find in their own city.